Member of Parliament (MP) and former Government Minister Irfaan Ali has questioned the rationale behind the Bank of Guyana’s (BoG) defence of a recent news article which sought to highlight that the gold reserve in the bank has hit rock bottom, from an initial $25 billion in 2014 to $1.9 billion in 2018.Opposition MP Irfaan AliMoreover, the Opposition spokesperson on finance in the National Assembly, said while the BoG by their own response have highlighted an even greater issue when it comes to the probability of a looming financial instability.According to a recent document, its total assets as of March 28, 2018, were $206.4 billion. This includes $1.9 billion in gold reserves, $82.1 billion in capital market securities and $5.6 billion in money market securities. This is a reduction from the gold reserves the bank recorded in June 2017. According to the bank’s Half Year Report last year, it had $4.8 billion worth of gold in its foreign holdings as assets.Indeed, the gold reserves have steadily been declining with each passing year. At the end of 2016, the bank had $7.4 billion in gold, while at the end of 2015 the gold reserves stood at $14.2 billion. At the end of 2014 the bank of Guyana had $25 billion in gold as assets.In the case of total assets, that has also seen a marked decrease. At the end of 2014, total assets were $207.9 billion. It reduced in 2015, being recorded at $188.7 billion in December of that year, before recovering by 2016-year end and being recorded at $220 billion. At June 2017, total assets were $221.8 billion, before the drop recorded in this year’s figures.But the BoG responded to state that gold is not managed as an exclusive reserve asset for holding, but as part of a portfolio of assets. It said gold may be sold for a number of reasons; including maximising profits, rebalancing of the portfolio, meeting liquidity needs, or optimising opportunities in other asset classes.Ali therefore said if the BoG’s claims are true, then the depletion of gold reserve in excess of 92 per cent is of serious concern. “Given the various scenarios why gold may be liquidated, then either or all of the following are plausible: one, key portfolios in BoG are on the brink of insolvency; and two, liabilities are skyrocketing, thus the need for additional liquidity,” he observed.The Opposition MP said to determine what may have triggered the huge selloff, the latest statistical abstract produced by BoG was consulted. The report, among other things, pointed out, pari passu with depletion of gold reserve, Government deposits have also decline. “Using 2014 as the base year (last complete fiscal year for the People’s Progressive Party (PPP/C) administration), deposits held by BoG for central Government plummeted from $21.4 billion to a negative $44 billion by February 2018,” he added.The practice of countries selling gold it held in reserves is not an uncommon one. Many countries hold billions of dollars in gold as a “back up” in time of inflation or economic downturn. It is usually in these cases that the gold is then sold.At present, gold prices are approximately US$1350 per ounce. It has fluctuated over the years, at one-point hovering around the US$1000 per ounce mark in 2016. In Guyana’s case, observers are likely to worry whether the State received the best price the world market could offer.Other considerations would see links being established between the steady selling off of gold and Guyana’s regressing economic standing. Government has confirmed that Guyana recorded a growth rate of just 2.1 per cent for 2017.The BoG has defended its decision to sell off portions of Guyana’s gold reserves, saying the move was reflective of “strategic trading”. It said it trades gold and replenishes the stock based on market opportunities. The bank noted that gold is not managed as an exclusive reserve asset for holding, but as part of a portfolio of assets.As such, the BoG assured that the benchmark for the holdings of international reserves are vigilantly adhered to and upheld. It further stated that the domestic market has an excess supply of foreign currency to meet domestic demand while maintaining a stable foreign currency exchange rate.